The U.S. has taken these sanctions very seriously. The U.S. ban on Russian oil imports has further pushed up gas prices. GOP leaders blame the soaring fuel prices on a decision made by President Biden in his early days of his administration to block Keystone XL Pipeline.
Texas Rep. Dan Crenshaw has called for the Biden Administration to increase domestic oil production. He stated in a Tweet one day before Russia’s February 24, attack, that Keystone would have produced 830,000 barrels per day.
He tweeted, “Stop Importing from Russia, Start Producing More” in March.
Governor of South Dakota Kristi Noem took Crenshaw one step further, writing in a February 24, op–ed for Fox News, that Mr. Biden’s decision to stop the Keystone XL Pipeline was “signaling that American energy independence does not matter.”
She wrote that Keystone would have eased those fears, while also giving America the flexibility to respond to Russian aggression through expanding energy exports to Europe.
Expanding Keystone would offer some relief to the pump, with Americans experiencing the worst inflation in 40 years.
The root of the problem
It is important to understand the reasons for high oil prices. Gregory Nemet, a professor of public affairs at University of Wisconsin-Madison’s Wisconsin Energy Institute, said that oil prices have risen steadily since last fall when they were around $70 per barrel. It then rose to over $130 last week, before falling back to $100 on Tuesday. The ongoing economic recovery drove the initial rise in crude oil prices. This helped to boost demand from consumers and businesses, which had been affected by the COVID-19 pandemic.
He stated that there was more transport and more people flying, more people driving, which means more oil demand. “But supply doesn’t always respond quickly to this kind of shock in the demand.”
Although it wasn’t the initiator of the increase, the war in Ukraine plays an important role.
Nemet stated that markets respond to political instability in countries that produce large amounts of oil. “And it’sn’t necessarily that they’re saying, ‘Oh there’s too much oil.’ “It’s more like, “Oh, there’s more risk now than ever before.”
According to the U.S. Energy Information Administration, Russia is the second largest exporter of crude oil. According to the American Fuel and Petrochemical Manufacturers report, the U.S. imports an average of 209,000 barrels per day from Russia. This figure represents 3% of U.S. crude oils imports and 1% of crude oil processed in U.S. oil refineries.
Keystone XL was an expansion of an existing North American pipeline. It would have transported 830,000 barrels crude oil daily from Alberta, Canada to Nebraska. According to Reuters, the $8 billion expansion had only been 8% completed at the time that Mr. Biden stopped its construction.
Many experts disagree that the Keystone pipeline would have stopped U.S. gasoline prices from reaching a record high. They explained that expanding the Keystone would have raised global oil production by less then 1%. This amount is almost negligible.
Nemet stated, “I can understand why people make that connection.” “But when it comes to gasoline prices and global oil price, it’s something you should ignore as it would have zero impact.”
Americans pay more for their products, but less production
Nemet said that even if the pipeline were built, it would not help with the price of the pump. He also noted that the U.S. had already doubled its oil production in the past 15 years. “But, we still have $100/barrel oil.”
Inflation is soaring and gas prices are on the rise. They reached an average $4.33 per gallon March 11, according AAA.
“The U.S. is only one part of the story. Nemet stated that it’s a global marketplace. “So we have 8 billion people who are consuming oil, as well as many countries producing it. It all goes into one market.”
David Kieve, the president of the advocacy group Environmental Defense Fund Action also stated to CBS News that the Keystone pipeline expansion would not have reduced the impact of the Ukraine crisis on fuel prices.
He stated that “The Keystone pipeline would not be completed under any circumstances, if you were a proponent for seeing it complete,” he said. It wouldn’t have internet and it wouldn’t pump oil until 2023. … The idea that the president’s position regarding the pipeline that would not be pumping oil encouraged Vladimir Putin to invade Ukraine seems so absurd.
Even if the Biden administration offered new oil leases immediately to drillers it would not help the current costs Americans are facing. Kieve stated that it would take between six and ten years for oil from a lease to reach the global market.
Clean energy lovers prefer less oil
Kieve stated that Mr. Biden’s agreement with the International Energy Agency to allow 30,000,000 barrels of oil out of the nation’s Strategic Petroleum Reserve will put downward pressure on gas prices short-term. To help alleviate some of the disruptions in supply caused by the conflict in Ukraine, the agency will release 60 million barrels total of crude oil.
Kieve stated that you won’t find many environmental organizations jumping up to declare, “Hey, this was the best thing ever!” But there’s a recognition that these types of actions might have an impact on the prices Americans pay at the pump.
According to Nemet and Kieve, the best way for Americans to avoid rising oil prices is to speed up the transition from fossil fuels towards renewable energy. Renewable energy is far more dependent on limited and fixed resources than oil. They also stated that energy from solar panels, wind turbines, and other low-carbon technologies tends to be cheaper the wider it is used.
Nemet stated that instead of there being international competition for oil, where everyone wants it and there is a fixed amount of it available, it’s more different. It’s because as we produce more clean energy technologies, they become more affordable for everybody.
Kieve stated that while we are all aware of the pain Americans feel at the pump, the best way to end the pain is to get rid the pump entirely. “The energy we gather here at home and then work to find a better way of storing it is what will power us here at our home.”
